Correlation Between Appen and BOSTON BEER
Can any of the company-specific risk be diversified away by investing in both Appen and BOSTON BEER at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Appen and BOSTON BEER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Appen Limited and BOSTON BEER A , you can compare the effects of market volatilities on Appen and BOSTON BEER and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Appen with a short position of BOSTON BEER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Appen and BOSTON BEER.
Diversification Opportunities for Appen and BOSTON BEER
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Appen and BOSTON is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Appen Limited and BOSTON BEER A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOSTON BEER A and Appen is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Appen Limited are associated (or correlated) with BOSTON BEER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOSTON BEER A has no effect on the direction of Appen i.e., Appen and BOSTON BEER go up and down completely randomly.
Pair Corralation between Appen and BOSTON BEER
Assuming the 90 days horizon Appen Limited is expected to generate 3.65 times more return on investment than BOSTON BEER. However, Appen is 3.65 times more volatile than BOSTON BEER A . It trades about 0.03 of its potential returns per unit of risk. BOSTON BEER A is currently generating about -0.01 per unit of risk. If you would invest 175.00 in Appen Limited on August 27, 2024 and sell it today you would lose (48.00) from holding Appen Limited or give up 27.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Appen Limited vs. BOSTON BEER A
Performance |
| Timeline |
| Appen Limited |
| BOSTON BEER A |
Appen and BOSTON BEER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Appen and BOSTON BEER
The main advantage of trading using opposite Appen and BOSTON BEER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Appen position performs unexpectedly, BOSTON BEER can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BOSTON BEER will offset losses from the drop in BOSTON BEER's long position.| Appen vs. BOSTON BEER A | Appen vs. THAI BEVERAGE | Appen vs. Tsingtao Brewery | Appen vs. Thai Beverage Public |
| BOSTON BEER vs. Apple Inc | BOSTON BEER vs. Apple Inc | BOSTON BEER vs. Apple Inc | BOSTON BEER vs. Microsoft |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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